Beruflich Dokumente
Kultur Dokumente
3d 1228
ARGUED: James H. Falk, Jr., The Falk Law Firm, Washington, D.C., for
Appellants. Angus Robert Everton, Mason, Ketterman & Morgan,
Baltimore, Maryland, for Appellee. ON BRIEF: James H. Falk, Sr., The
Falk Law Firm, Washington, D.C., for Appellants. Charles N. Ketterman,
Mason, Ketterman & Morgan, Baltimore, Maryland, for Appellee.
Before HALL and MURNAGHAN, Circuit Judges, and STAMP, Chief
United States District Judge for the Northern District of West Virginia,
sitting by designation.
Affirmed by published opinion. Judge MURNAGHAN wrote the opinion,
in which Judge HALL and Chief Judge STAMP joined.
OPINION
MURNAGHAN, Circuit Judge:
Following the death of their son in a car crash, Appellants Charles Myron
Benner and Patricia Gurney-Benner sought payment from their insurer,
Nationwide Mutual Insurance Company. When they were denied full coverage
for their claims, the Benners filed a declaratory judgment action in federal
district court seeking a determination of the coverage limits of their primary
automobile and umbrella insurance policies.1 The district judge granted
summary judgment to the insurer regarding the umbrella policy, but sent the
remaining issues regarding the primary policy to a jury. After the jury returned
a verdict in favor of Nationwide, the court issued an order declaring that the
primary policy provided only minimal coverage for the Benners claims while
the umbrella policy provided no coverage. The Benners have challenged the
district court's order on several grounds. Because we find no error, we affirm.
I.
2
In April 1992, the Benners' young son, John Daniel, died in an automobile
wreck which occurred while he was riding as a passenger in the family's 1991
Honda Accord. At that time, the Benners held two Nationwide insurance
policies which covered the Honda: (1) a primary policy, called a Century II
Auto Policy, originally purchased in 1985 and renewed in six-month intervals;
and (2) a Personal Umbrella Policy providing additional coverage and renewed
annually.
The Benners presented survival and wrongful death claims to Nationwide for
more than $500,000 in damages arising from their son's death. They believed
that they possessed $500,000 in primary coverage for damages sustained by
any member of their family and umbrella coverage of $2,000,000.2 Nationwide
conducted an investigation of the accident and determined that the family baby
sitter, who was driving the Benners' car with their permission, was solely at
fault. The insurer also concluded that the Benners were entitled to a maximum
of $20,000 on their claims because of a "household exclusion" that had been
added to their primary policy and gone into effect on December 26, 1991. The
exclusion provision limited to the statutory minimum requirements of Maryland
law Nationwide's liability for bodily injury to an insured or any family member
of an insured living in the same household.3 The household exclusion had not
previously been a part of the Benners' policy.4 In applying the exclusion to the
Benners' claims, Nationwide maintained that it had sent along with their policy
renewal pages documents noticing and describing the exclusion. Because the
Benners paid their premium on time and without protest, the household
exclusion became effective during the next renewal period.5 The umbrella
policy also contained a household exclusion.6
After Nationwide denied the Benners the coverage they had anticipated, the
Benners invoked federal diversity jurisdiction and filed an action in the United
States District Court for the District of Maryland.7 They sought a declaratory
judgment that the coverage limit for the wrongful death of their son under the
primary policy was $500,000--not $20,000 as Nationwide asserted--and a
declaratory judgment as to the available coverage under their umbrella policy.
On cross motions for summary judgment, the district judge granted only
Nationwide's motion concerning the umbrella policy. The court ruled that, as a
matter of law, the notice requirements set forth in Article 48A, Section 240AA
of the Maryland Insurance Code did not apply to the household exclusion
contained in the primary policy and that there was no coverage available under
the umbrella policy for the Benners' claims. The court also held that the
Maryland Code imposed upon Nationwide a regulatory duty to provide the
policyholder with notice of any reduction in coverage.
5
At the close of all the evidence at trial, both parties moved for judgment as a
matter of law. Not granting either motion, the district court sent the case to the
jury. The jury found in favor of Nationwide on all of the remaining issues
concerning the primary policy. Four days later, the district judge entered
judgment in accord with the jury's determinations, declaring that the primary
auto policy provided coverage only up to $20,000 per person/$40,000 per
occurrence and that the umbrella policy provided no coverage for the Benners'
wrongful death and survival claims. The Benners filed a timely appeal.
II.
6
As to the primary policy, the Benners contend that the district court erred in
failing to rule that, as a matter of law, the household exclusion was void. Under
Maryland law, an insurer who inserts a coverage exclusion during renewal of a
policy must satisfy certain conditions. Government Employees Ins. Co. v.
Ropka, 74 Md.App. 249, 536 A.2d 1214, 1219-28, cert. denied, 312 Md. 601,
541 A.2d 964 (1988). The insurer must draft the exclusion unambiguously,
provide conspicuous notice of the change in coverage, provide legal
consideration for the reduction in coverage and comply with all governing
notice requirements. Id. The Benners maintain that Nationwide unilaterally
added the household exclusion to their policy renewal without their knowledge.
Specifically, they allege that Nationwide failed to deliver the amendatory
endorsement and stuffer to them, that Nationwide failed to comply with
Maryland's statutory and common law notice requirements, that the household
exclusion is ambiguous and that there was no consideration supporting the
reduction in coverage. The jury specifically found against the Benners on each
of these issues, after the judge had already ruled that Maryland's enhanced
notice requirements for changes in auto insurance policies did not apply.
States v. Smith, 30 F.3d 568, 571 (4th Cir.), cert. denied, 513 U.S. 1028, 115
S.Ct. 604, 130 L.Ed.2d 514 (1994). Because there was a full trial and final
judgment on the merits, we may not review the district courts pre-trial denial of
summary judgment as to the primary policy. See Chesapeake Paper Prods. Co.
v. Stone & Webster Eng'g Corp., 51 F.3d 1229, 1234-37 (4th Cir.1995)
(adopting, for various reasons, the rule that denial of summary judgment is not
reviewable on appeal after a full trial and final judgment on the merits of the
case has occurred, resolving the factual issues). We may review, however, the
district court's denial of the Benners' motion for judgment as a matter of law
raising legal issues pursuant to Rule 50 of the Federal Rules of Civil Procedure.
8
While the Benners did move for judgment as a matter of law at the close of all
the evidence--the equivalent of seeking a directed verdict--the record before us
indicates that they failed to renew their motion after the jury verdict as required
by Rule 50(b). The Benners' omission limits our remedial power, but not our
ability to review the alleged error. See Morrash v. Strobel, 842 F.2d 64, 69-70
(4th Cir.1987) (after finding that the trial court erred in denying a motion for
directed verdict, stating that party's failure to move for judgment n.o.v. limited
the appellate court to vacating judgment and remanding for new trial); Smith v.
Trans-World Drilling Co., 772 F.2d 157, 162 (5th Cir.1985) (same). The
prerequisite for reviewing the sufficiency of the evidence on appeal is a proper
pre-verdict motion at trial for judgment as a matter of law pursuant to Rule
50(a). See Bristol Steel & Iron Works, Inc., v. Bethlehem Steel Corp., 41 F.3d
182, 186-87 (4th Cir.1994) (observing that "[i]t is well settled that in the
absence of a motion for directed verdict, the sufficiency of the evidence
supporting the jury's findings is not reviewable on appeal") (citation omitted);
Smith, 772 F.2d at 160 (finding motion for directed verdict under Rule 50(a)
adequate to preserve sufficiency of evidence argument on appeal despite failure
to move for judgment n.o.v. under Rule 50(b)). In the absence of a proper Rule
50(b) motion after the verdict, we cannot order an entry of judgment contrary to
that made by the district court as the Benners seek. See Johnson v. New York,
N.H. & H.R. Co., 344 U.S. 48, 50, 73 S.Ct. 125, 126-27, 97 L.Ed. 77 (1952)
(holding that failure to move for judgment n.o.v. pursuant to Rule 50(b)
deprives the appellate court of power to order entry of judgment); Cone v. West
Virginia Pulp & Paper Co., 330 U.S. 212, 218, 67 S.Ct. 752, 756, 91 L.Ed. 849
(1947) (same); Morrash, 842 F.2d at 70 (applying rule). If we find error, we
may only vacate and remand. Morrash, 842 F.2d at 70; Smith, 772 F.2d at 162.
Under Maryland law, a presumption of delivery and receipt of mail arises when
material is properly mailed. Border v. Grooms, 267 Md. 100, 297 A.2d 81, 83
(1972); McFerren v. Goldsmith-Stern Co., 137 Md. 573, 113 A. 107, 109
(1921). Evidence of ordinary business practices concerning the mailing of
notices is sufficient to create the presumption of both sending and receiving.
Borg-Warner Acceptance Corp. v. Rossi, 365 F.Supp. 56, 61 (D.Md.1972)
(applying Maryland law), aff'd, 485 F.2d 1388 (4th Cir.1973); Mohr v.
Universal C.I.T. Credit Corp., 216 Md. 197, 140 A.2d 49, 52 (1958). While the
presumption may be rebutted so as to create a question of fact, testimony by the
addressee that he did not receive, or does not remember receiving, the material
is not conclusive. Border, 297 A.2d at 83; McFerren, 113 A. at 109. The trier of
fact should consider that proof along with all of the other evidence offered in
the case to determine whether the item was mailed and received. Border, 297
A.2d at 83; McFerren, 113 A. at 109. Not only has the presumption been
applied in the insurance context, see Bock v. Insurance Comm'r, 84 Md.App.
724, 581 A.2d 857, 861-63 (1990), but the Maryland Insurance Code makes the
general presumption applicable to an insurers mailing of premium notices.9
12
On review of the record, we find the jury's determination that the Benners
received the endorsement and stuffer pertaining to the household exclusion
reasonable. Despite having received the declaration pages for the renewal
period of December 26, 1991, to June 26, 1992, and paying the stated premium
on time, the Benners alleged that they never received the accompanying
documents pertaining to the change in coverage. The Benners' denial of receipt
failed as a matter of law to overcome the presumption created by Nationwide's
evidence that it mailed the documents as part of its renewal of the Benners'
policy for that period, as it did for all other policy renewals at that time.
13
14
B. Notice
15
16
17
Although the Benners maintain that the special notice requirement applies, the
district court correctly concluded that the household exclusion at issue falls
outside the statute. Nationwide sought and received approval from the
Maryland Insurance Commissioner for a general rate increase of 2.3 percent
and the household exclusion at the same time. The exclusion can be fairly
characterized as part of "a general reduction in coverage approved by the
Commissioner" as it was included in Endorsement 1952C approved on August
6, 1991, and was part of the changes made applicable to all new policies and all
existing policies renewed after the approval. Similarly, the premiums charged
can be said to have been approved by the Commissioner as part of a general
rate approval because their calculation was reflected in the documentation
submitted in support of the rate increase. Therefore, the policy is governed by
the general notice requirements set forth in the Maryland Code of
Regulations.10
18
19
20
Upon receipt of proper notice, the insured has the duty to read the notice, and
the insurer is not responsible for an insured's failure to do so. Twelve Knotts
Ltd. Partnership v. Fireman's Fund Ins. Co., 87 Md.App. 88, 589 A.2d 105, 113
(1991); see also Shepard v. Keystone Ins. Co., 743 F.Supp. 429, 432
(D.Md.1990) (applying Maryland law). Furthermore, when the insured accepts
a policy, the insurer is entitled to assume that he accepts all of its stipulations,
provided that they are legal and not contrary to public policy. Twelve Knotts,
589 A.2d at 113. If changes appear in the contract, the insured has a duty to
examine them promptly and notify the insurer of his refusal to accept them. If
the insured accepts the policy or retains it for an unreasonable length of time,
the insurer may presume that he ratified any changes and agreed to all of the
terms. Id.
21
22
Again, despite the Benners' contention that they were never notified of the
reduction in coverage, Nationwide's evidence and the Benners' timely payment
of their renewal premium lead to an inference of receipt of notice. In addition, a
reasonable jury could conclude that the documents themselves met the
applicable notice requirements. The exclusion provision, which appears in the
amendatory endorsement under the bold-faced heading entitled "Coverage
Exclusions," is straightforward and expressed in unambiguous terms. It informs
the policyholder that the policy will "not cover" bodily injury to any insured or
resident family member beyond the limits required by Maryland law. Charles
Benner testified at trial that, if he had read the policy exclusion in 1991, he
would have understood that it reduced his coverage. The endorsement further
highlights the significance of its contents by stating at the top, "[p]lease attach
this important addition to your auto policy."
23
24
While none of the documents use the word "reduction" nor fully explain how
the household exemption will affect the Benners' coverage, the applicable
regulation does not mandate such precision. It requires only that insurers advise
their policyholders, "in general terms," of any changes in the coverage. The
jury could reasonably conclude that Nationwide did so with the declaration
pages, the endorsement and the stuffer.
25
Finally, the declaration pages alone are sufficient to support a jury finding that
the Benners either were, or should have been, on notice of the exclusion. Not
only is it undisputed that the Benners received the renewal declaration pages
which refer to Endorsement 1952C, but Charles Benner testified that he
regularly looks to the last sheet of the declaration pages for notice of changes in
his policy. Because the Benners paid the renewal premium on time and without
objection to the reduction in coverage, the jury could reasonably find
Nationwide entitled to presume that the Benners ratified the changes and
agreed to the terms of renewal.
27
Not only did the Benners fail to prove conclusively that the exclusion is
ambiguous as a matter of law, but Nationwide similarly failed to establish that
the provision is unambiguous. We find that the jury's resolution of the matter in
favor of the insurer is reasonable and supported by sufficient evidence.
28
Law" without specifying that such limits may be found in the Maryland
Financial Responsibility Law, the omission does not render the exclusion
ambiguous or open to interpretation as there is no state law requiring
identification of the statute in insurance documents. In enforcing exclusions in
insurance policies, Maryland courts generally read in the limits set by the state's
financial responsibility laws, whether or not those restrictions are specifically
referenced. See, e.g., State Farm Mut. Auto. Ins. Co. v. Nationwide Mut. Ins.
Co., 307 Md. 631, 516 A.2d 586, 591-92 (1986); West American Ins. Co. v.
Popa, 108 Md.App. 73, 670 A.2d 1021, 1028-29 (1996). Furthermore,
Maryland courts follow the general rule of permitting contracts to incorporate
by reference the content of other documents. See Wheaton Triangle Lanes, Inc.
v. Rinaldi, 236 Md. 525, 204 A.2d 537, 540 (1964); Ray v. William G. Eurice
& Bros., 201 Md. 115, 93 A.2d 272, 279 (1952).
29
31
typically provides consideration for the benefits provided by the policy. Id.
Maryland courts hold that an attempted policy modification should be voided
for lack of consideration if the insured can show that he received less coverage
than was commensurate with the amount he paid. Id.
32
The record before us shows that the Benners' premium for primary coverage of
their Honda Accord increased by 4.3 percent for the relevant renewal period.
The Benners therefore contend that no consideration supported the renewal
contract with its decreased coverage because they "paid more and got less."
Nationwide responds that under Maryland law, "a decrease in premium owing
to a decrease in coverage can be completely obliterated by a rate increase that
goes into effect at the same time." Ropka, 536 A.2d at 1226-27. The insurer
maintains that just such an offset occurred in the present matter because the
Benners' premium increase would have been 6.7 percent had the reduced
coverage from the household exclusion not been taken into account.12 Because
the record does not compel a different conclusion and the jury's finding of valid
consideration is reasonable and supported by sufficient evidence, the district
court properly entered judgment in accordance with it.
33
34
III.
35
The Benners' umbrella policy purports to provide excess liability and additional
coverage, but it too has a household exclusion provision. That exclusion
exempts damages from "[b]odily injury or personal injury to an insured who
lives in your household." The Benners concede that the exclusion applies to the
damages sought in their survival claim because their son experienced a bodily
injury, i.e., death. However, they maintain that they are entitled to wrongful
death damages to compensate for the emotional loss they suffered because such
recovery would not amount to damages for the bodily injury itself. They argue
that the umbrella policy's exclusion, unlike the exclusion provision in the
primary policy, does not bar derivative claims.
36
37
Even if we assume that the Benners are correct in their assertion that wrongful
death actions are distinct from claims for bodily injury, we cannot read the
umbrella policy to extend coverage to their wrongful death claim. Again,
Maryland follows the objective law of contracts and requires courts to interpret
insurance contracts by giving words their customary and normal meaning.
DeJames, 261 A.2d at 749. "[W]here an insurance company, in attempting to
limit coverage, employs ambiguous language, the ambiguity will be resolved
against it as the one who drafted the instrument, as is true in construction of
contracts generally. Where there is no ambiguity in an insurance contract,
however, the Court has no alternative but to enforce the policy's terms." Blue
Bird Cab. Co. v. Amalgamated Casualty Ins. Co., 109 Md.App. 378, 675 A.2d
122, 125-26 (1996). Like the district court, we find no ambiguity in the
umbrella policy and thus must give effect to its "plain meaning." Aetna
Casualty & Surety Co. v. Insurance Comm'r, 293 Md. 409, 445 A.2d 14, 19
(1982).
38
The policy clearly sets forth the applicable definitions and terms of coverage.
Its provisions specify that coverage is available only for damages "due to an
occurrence" and explain that an occurrence "must result in bodily injury,
Moreover, even if ambiguity did exist, we must still find in Nationwide's favor.
If damages from bodily injury are different from damages from wrongful death
as the Benners argue,14 then there can be no umbrella coverage for wrongful
death damages because the policy clearly excludes any claim other than those
for damages resulting from bodily injury, property damage or personal injury.
On the other hand, if bodily injury damages include damages for wrongful
death, as the umbrella policy seems to indicate by including "death" in its
definition of "bodily injury",15 then the damages sought are excluded by virtue
of the policy's household exclusion. Using the same terms and definitions as the
rest of the policy, the provision expressly excludes damages from bodily injury
to an insured in the household.
40
Under any interpretation, the umbrella policy denies the Benners coverage for
their wrongful death claim. Thus, the district court properly granted
Nationwide's motion for summary judgment and ruled that the umbrella policy
provided no payment.
IV.
41
While we find the outcome in the matter before us unhappy for the Benners, we
believe it to be necessary under the governing law and facts as they were
properly presented to the jury. For the reasons described above, the judgment is
42
AFFIRMED.
The Benners' minor daughter, Molly Benner, was also named as a plaintiff
In July 1987, the Benners had increased to $500,000 per person/$500,000 per
occurrence, the bodily injury liability coverage limits in their primary policy in
exchange for higher premium payments. Under the terms of the policy, the
Benners were entitled to "benefits for accidental bodily injury involving a
motor vehicle." The policy defined "bodily injury" as "bodily injury, sickness,
disease or death" and provided basic personal injury protection to "you and
your relatives" and any person injured "while using your auto with your
permission."
For the next four years, the Benners renewed their primary policy with the
same bodily injury coverage limits every six months. On December 10, 1991,
the Benners renewed the policy for the six-month period from December 26,
1991, to June 26, 1992. Although the premium was higher, the declarations
pages for the renewal period specified the same bodily injury liability coverage
which the Benners had maintained for the preceding four years. Therefore, the
Benners have maintained that they believed they possessed $500,000 in
primary coverage for damages sustained by any member of their family. On the
date of the wreck, the Benners also had umbrella coverage of up to $2,000,000.
3
It does not cover bodily injury to any insured or any resident family member in
an insured's household. However this exclusion applies only to the extent that
the limits of liability for this exclusion exceed the limits of liability required by
Maryland law
It reads:
EXCLUSIONS
Excess liability and additional coverage does not apply to:
10
The section imposes a duty on insurers to provide each policyholder with notice
that its renewal premium is due at least 17 days before the due date.
Md.Ann.Code art. 48A, 240B(a) (Michie 1994). That duty is deemed
discharged if the insurer shows that its established procedures would have
resulted in the placing of the notice of renewal premium due in the U.S. mail.
240B(c)
10
The Benners rely on Ropka, 536 A.2d at 1226, to support their position that
Section 240AA applies. In that opinion, however, the Maryland Court of
Special Appeals never ruled upon the applicability of Section 240AA. Instead,
the court remanded the issue to the trial court. While the trial court did apply
Section 240AA to the general reduction of coverage approved by the
Commissioner on remand, it offered only cursory explanation for doing so.
Government Employees Ins. Co. v. Ropka, No. CV0825, slip op. at 3-4 (Cir.
Ct. Carroll County Nov. 29, 1988). In addition, the Court of Special Appeals
affirmed the lower court's decision without addressing the application.
Government Employees Ins. v. Ropka, No. 26, Sept. Term 1989, slip op. at 3,
80 Md.App. 741 (Md.Ct.Spec.App. Sept. 29, 1989). Therefore, because we can
find no reasoned analysis of Section 240AA concluding that it applies to a
general reduction in coverage approved by the Commissioner and because the
plain meaning derived from the clear and unambiguous language of the statute
suggests that it is inapplicable here, we conclude that Section 240AA does not
apply. See Commissioner v. Bosch's Estate, 387 U.S. 456, 464-65, 87 S.Ct.
1776, 1782, 18 L.Ed.2d 886 (1967) (state lower court decisions are not
controlling when the highest state court has not "spoken on the point" and other
persuasive authority suggests that the highest court "would decide otherwise")
11
The regulation specifies that the insurer provide notice by way of the following
phrase or its equivalent:
Notice: Certain coverage in this policy has been eliminated or reduced, or a
change has been made in the deductible. The description of the change in
coverage or deductible is as follows:....
30.32.02. If an insurer changes a policy without giving proper notice, the
policy "shall be treated as being in effect without the ... reduction in coverage."
30.32.03.
12
The Benners' bodily injury liability premium for the Honda Accord increased
from $127.50 to $133.00 for the December 26, 1991, to June 6, 1992, renewal
period. Nationwide presented evidence that the $5.50, or 4.3 percent, increase
in premium resulted from a general base rate increase of 2.3 percent for all
Nationwide auto policyholders in Maryland and other factors. Nationwide
relies on the 4.3 percent increase in premium as consideration for its $480,000
reduction in the Benners' coverage, on the basis that it gave up the opportunity
to impose an even greater increase in premiums. Nationwide sought and
received approval for the general rate increase and the household exclusion at
the same time
13
With regard to the umbrella policy, the district court did grant Nationwide's
corresponding motion for summary judgment. Therefore, the rule articulated in
Chesapeake precluding appellate review of summary judgment denial does not
apply. 51 F.3d at 1237 n. 11 ("Our holding does not apply to decisions
reviewing denied motions for summary judgment when the district court
granted the opposing party's corresponding summary judgment motion.")
14
15